Correlation Between First Credit and Masood Textile

Can any of the company-specific risk be diversified away by investing in both First Credit and Masood Textile at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Credit and Masood Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Credit And and Masood Textile Mills, you can compare the effects of market volatilities on First Credit and Masood Textile and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Credit with a short position of Masood Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Credit and Masood Textile.

Diversification Opportunities for First Credit and Masood Textile

0.04

Correlation Coefficient

First Credit  Masood Textile

Significant diversification

The 3 months correlation between First and Masood is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Credit And and Masood Textile Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masood Textile Mills and First Credit is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Credit And are associated (or correlated) with Masood Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masood Textile Mills has no effect on the direction of First Credit i.e., First Credit and Masood Textile go up and down completely randomly.

Pair Corralation between First Credit and Masood Textile

Assuming the 90 days trading horizon First Credit And is expected to under-perform the Masood Textile. In addition to that, First Credit is 1.17 times more volatile than Masood Textile Mills. It trades about 0.0 of its total potential returns per unit of risk. Masood Textile Mills is currently generating about 0.02 per unit of volatility. If you would invest  5,589  in Masood Textile Mills on September 5, 2024 and sell it today you would earn a total of  28.00  from holding Masood Textile Mills or generate 0.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	83.93%
Values	Daily Returns

First Credit And  vs.  Masood Textile Mills

First Credit And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Credit And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, First Credit is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Masood Textile Mills

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Masood Textile Mills are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Masood Textile is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Credit and Masood Textile

The main advantage of trading using opposite First Credit and Masood Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Credit position performs unexpectedly, Masood Textile can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Masood Textile will offset losses from the drop in Masood Textile's long position.

The idea behind First Credit And and Masood Textile Mills pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.